India's likely next leader Modi seen implementing Thatcher-like reforms
Advisers to the front runner, Narendra Modi, expect him to slash size of government if the opposition wins elections starting today
When Indian opposition leader Narendra Modi gave a speech on the virtues of smaller government and privatisation on April 8 last year, supporters called him an ideological heir to former British prime minister Margaret Thatcher, who died that day.
Modi, favourite to form India's next government after elections starting today, has yet to unveil any detailed economic plans but it is clear that some of his closest advisers and campaign managers have a Thatcherite ambition for him.
"If you define Thatcherism as less government, free enterprise, then there is no difference between "Modinomics" and "Thatcherism", said Deepak Kanth, a London-based banker now collecting funds as a volunteer for Modi's Bharatiya Janata Party (BJP).
Kanth, who says he is on the economic right, is one of several hundred volunteers with a similar philosophy working for Modi in campaign war rooms across the country. Among them are alumni of Goldman Sachs and JP Morgan trading floors.
"What Thatcher did with financial market reforms, you can expect a similar thing with infrastructure in India under Modi," he said, referring to Thatcher's trademark "Big Bang" of sudden financial deregulation in 1986.
Modi's inner circle also includes prominent economists and industrialists who share a desire to see his BJP draw a line under decades of socialist economics, cut welfare and reduce the role of government in business.
The BJP is due to unveil detailed economic plans today and is expected to make populist pledges to create a massive number of manufacturing jobs and to restart India's stalled US$1 trillion infrastructure development programme.
Conversations with top policy advisers to Modi suggest an agenda that goes further than the upcoming campaign manifesto, including plans to overhaul national welfare programmes. There is also a fierce debate inside his team about privatising some flagship state-run firms, including loss-making Air India.
Bibek Debroy, a prominent Indian economist speaking for the first time about his role advising Modi during the campaign, said the Hindu nationalist leader shared his market-driven policy platform and opposed handouts.
"It is essentially a belief that people don't need doles, and don't need subsidies," Debroy said. Instead, the government should focus on building infrastructure to ease poverty, he said.
An attack on welfare would mark an ideological shift.
Although India adopted free-market reforms 20 years ago, the man responsible for them, current Prime Minister Manmohan Singh, has refocused on redistribution of wealth in recent years under the influence of Congress party chief Sonia Gandhi.
The battle of ideas between Modi and the ruling Congress party was mirrored in a public spat between two well-known economists of Indian origin, Nobel laureate Amartya Sen and Columbia University's Jagdish Bhagwati.
Sen's belief that public spending on food subsidies and health was needed to end poverty was adopted by Gandhi. The result was a proliferation of welfare schemes, most notably a rural work programme and a giant subsidised food plan.
Modi's economic thinking is closer to Bhagwati, who strongly advocates poverty reduction through deregulation-led growth. Bhagwati's colleague and writing partner, Arvind Panagariya, a former chief economist at the Asian Development Bank, is tipped by some in the BJP for a role in any Modi government.
The parallels with Thatcher do not end with economics. Like her, Modi is a small-town outsider to the capital's political circles and has a reputation for riding roughshod over opponents.
In Gujarat state, where Modi has been chief minister for more than a decade, critics say he runs a one-man government.
